PARTICIPANT GUIDE. Retail Management. and. Operations. A curriculum aligned with nationally recognized industry skill standards for the Retail Manager

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1 PARTICIPANT GUIDE Retail Management and Operations A curriculum aligned with nationally recognized industry skill standards for the Retail Manager

2 Preface There has never been a more exciting time to study retailing. The rapid evolution of the industry from brick-and-mortar locations to the Internet or one s cell phone is itself a compelling reason to consider preparing for a career in this business. Fully one in five working Americans work in retailing today, so it clearly holds an allure for so many committed and open-minded individuals who labor in diverse functional areas from loss prevention and store design to utilizing the latest tools to engage customers through effective marketing. And by tomorrow, more changes will greet those of us who are drawn to this fascinating industry. Yet retailing requires more than passion though passion is often mentioned, together with willingness to work hard, as key to succeeding in retailing. The opportunity to grow is tied to a solid understanding and mastery of the critical competencies required to build a successful career. This curriculum was designed for the new or emerging Retail Manager as a tool to increase awareness of and improve skills related to managing and operating a retail enterprise. Intended to be part of a continuum of training and credentials, the Retail Management and Operations Curriculum is the second of three levels of training and is aligned with industry standards, as determined and validated by retail companies from across the United States, and the nationally recognized Professional Certification in Retail Management, awarded by NRF Foundation NRF Foundation and Castle Worldwide. All rights reserved.

3 Standards are a critical component of this program, as they provide the hand, provides the means to document the achievement of these requisite skills and to distinguished one both academically and professionally. The Retail Management and Operations curriculum, developed by retailers instruction, guidelines for group discussion, and experiential learning activities. The program is highly interactive and challenges the learner to apply new information to group discussions, exercises, case studies, and projects. including: Selling and Service Human Resources Operations Merchandising Financial Reporting We wish you the best of luck in your studies ahead NRF Foundation and Castle Worldwide. All rights reserved.

4 1 SELLING AND SERVICE Objectives: Participants will be able to: Identify major direct competitors. Understand how demographics influence merchandising decisions and customer profiles. Communicate annual sales, profit goals, and results. Establish selling and service goals. Model selling and service behaviors. Develop staffing schedules. Resolve customer complaints.

5 2 HUMAN RESOURCES Objectives: Participants will be able to: Identify the ways that Retail Managers affect employees and their daily employment experiences. Elaborate on how to successfully: Source, recruit, and interview candidates. On-board new hires. Provide the necessary training and monitor their training schedule. Communicate expectations. Set expectations and coach associates to ensure they are meeting the company s expectations. Explain why hiring the right people is important to business success. Support associate development.

6 3 STORE OPERATIONS Objectives: Participants will be able to: Identify the factors involved in operational management. Understand the financial impact that sales, staffing, asset loss, and shortage can have on profitability. Describe what conditions and experiences make up an exceptional shopping experience. Learn how to oversee the store s physical condition and appearance. Learn how to maintain a comfortable, safe, secure environment for customers and associates by: u Understanding what the common safety hazards are and how to prevent accidents, and u Handling emergency situations. Understand how to put together a successful staffing plan. Learn how to protect the store s profit by: u Understanding what shortage is, u Reviewing what actions contribute to shortage, u Developing action plans to protect the store s assets, and u Using cycle counts, physical inventories and reconciliations to measure shortages.

7 4 MERCHANDISING Objectives: Participants will be able to: Understand merchandise planning, purchasing, and analysis. Understand and be able to execute merchandise presentation process according to standards. Oversee the merchandising process, including price changes, transfers, return-tovendors, and damages. Ensure floor is set to planogram standards. Manage sales setup and ensure timeliness and accuracy with proper signing and pricing. Understand inventory performance. Direct and execute floor recovery.

8 5 FINANCIAL REPORTING Objectives: Participants will be able to: Read and interpret profit and loss statements and balance sheets by reporting periods. Understand the principles of cash flow. Know how to interpret periodic merchandise and sales plans. Calculate and track store-level key performance indicators.

9 1.1 INTRODUCTION TO SELLING AND SERVICE Objectives: Introduce the topic of selling and service behaviors. Reflect on personal experience to better understand customers needs and desires. Case Studies: Customer Considerations Scenario 1 You re a Retail Manager at a small clothing store. Your store specializes in women s upscale clothing, particularly designer dresses. It s located on a very busy corner in a large city. Since your neighborhood is still growing in popularity for shoppers, the stores around you either are not very well kept or they sell other products. There are very few clothing stores in your neighborhood. Scenario 2 You re a Retail Manager at a large food/grocery store in a highly populated area that has many restaurants. The food you sell is fresh, common, everyday food that local people want to eat. Your store is typically extremely busy and you occasionally run out of food when the local restaurants are cooking special meals as the cooks often buy their groceries from you. Review the scenarios and discuss following. What things would you consider or want to know more about before shopping for something in that store, either for yourself or for a friend? 1.2 Leading Selling and Service Objectives: Identify qualities of leadership in retail management. Identify how the Manager s values and beliefs affect success. How do you think leadership fits in the scope of your responsibilities as a Retail Manager? According to leadership expert Warren Bennis, Managers are people who. Leaders are people who NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-1

10 How do leaders inspire others to follow their lead? What are the characteristics and traits of a leader? How does the leader build trust? Character of a Leader Character is the disposition of a person made up of their beliefs, values, skills, and traits. Leaders display honorable character so that others develop trust in them and their vision. Beliefs: Values: Skills: SS-2 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

11 Exercise: Be, Know, Do In 1973, the U.S. Army listed several principles of leadership. In order to know yourself and seek self-improvement, you have to understand your be, know, do attributes. These principles are relevant in today s retail organizations. Write down a list of behaviors you associate with each of the Be, Know, Do principles of Leadership. Be: Know: Do: The Process of Great Leadership Challenge the Process Effective leaders first understand how things work, and then find processes that they believe need to be improved. In challenging the process, they seek to improve the existing methods and bring positive change to organizations. Leaders are proactive rather than reactive. While things do change quickly in retail, leaders respond well to change because they reprioritize throughout the day and are prepared with alternatives to handle change NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-3

12 Inspire a Shared Vision Leaders share the vision in words that can be understood by their followers. Help employees understand the company s overall strategy and how they contribute to achieving business objectives. When organizations make directives or change, embrace them and model the change through your words and actions. Communicating a mixed message creates cynicism, lowers morale, and deteriorates your image and credibility. Leaders show what to do and explain the value of directives and changes. Enable Others to Act Learn to delegate certain tasks that you don t need to do yourself to develop your staff s knowledge of the business grow future leaders. Ensure that tasks are understood, supervised, and accomplished. Give employees wiggle room to do what is right for customers. Model the way. When things get tough, leaders show how it can be done rather than simply telling others what to do. Establish credibility and develop future leaders by modeling the way to deal with difficult customers and tough situations. Encourage the Heart Celebrate success and share good news and success stories with your followers, but don t share your pain with them. Leaders know how to inspire and motivate with words of praise. Build team spirit. Leaders view a team as more than a group of people who work together. Understand the importance of caring for employees. Show interest in your people and their well-being at work. Exercise: Process of Leadership On separate sticky notes, write what you do or could do to reinforce each of these leadership processes. For example: Challenge the Process You reviewed the recovery process in your store and think it could improve. You identified the gaps in the process and established procedures to close those gaps. SS-4 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

13 1.3 CUSTOMER DEMOGRAPHICS Objectives: Understand how demographics influence merchandising decisions and customer profiles. Describe how to determine which types of customers your store wants to attract and the type of experience those customers will expect. It s important for you to know: Who are the customers who shop in this store? What is the demographic profile of the store s location? What are the customers service expectations? Exercise: Retail Formats Discuss the definition of these different retail formats and the type of service and products that are expected from each format. Mom-and-Pop: Mass Discounters: Warehouse Stores: Category Killers: Department Stores: Boutiques: Catalog Retailers: 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-5

14 e-tailers: Franchises: Convenience Stores: Vending Machines/Kiosks: DETERMINING CUSTOMER EXPECTATIONS Some customer expectations will be defined by the company s strategic direction or will be part of the company s brand or policy. Your store may also have a standard for a particular level of service or for a special product selection. Aspects of the customer experience may be part of your company s brand or mission statement. You ll need to find out what expectations are standard in your store. Customers will give you cues as to what they expect from your store. Here are some questions you will need to ask yourself to determine your customers expectations: What level of service or relationship with associates do most customers expect? What special services are available in your store? What level of product quality and prices do customers expect? SS-6 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

15 The levels of customer service will vary according to the retail format of your store. CUSTOMER PROFILES Every customer is different. You and your associates must determine the purpose of each customer s shopping trip and the experience he or she expects. Your store may also have certain customer profiles or a target customer population. Be sure your sales associates are trained on these profiles and how they can help meet their expectations. When you take advantage of IT methods, such as Customer Relationship Management (CRM) programs, your information collection and statistical analysis becomes more reliable, efficient, and convenient. Sales associates do not have to master complex knowledge and skills, but they do need to be trained in how to use these methods and the analyzed results to guide their sales and service. DEMOGRAPHIC PROFILES Demographic profiles include a variety of information about the customer such as age, sex, marital status, number of family members, income, occupation, education, ethnicity, etc. These profiles provide important market information that can influence customers requests and assist the retailer in developing appropriate strategies. The demographics of the community where your store is located is reflected in the type of customers who shop there. By studying your demographics, your company can identify new commercial opportunities. As a Retail Manager, you should be familiar with the demographics and ensure that your store carries the appropriate products and offers the right services to meet your customers needs. Some demographic considerations include: Vast territory Multiethnic Multicultural Exclusive Lifestyles When it comes to providing excellent selling and service to customers, the Retail Manager has many opportunities to enhance the customer s experience, improve customer satisfaction, and increase sales NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-7

16 Exercise: Brainstorming Create a list of ways you can help your stores increase customer satisfaction and increase sales. What is the Platinum Rule for customer service? Case Study: Making Changes Based on Demographics Scenario: Your consumer electronics store is located in an area of Manhattan that consists of many large multinational businesses and some high-rise apartment buildings. The local customer demographic is a high-income, corporate office businessperson who commutes long distances into the city to work. These customers also travel frequently for business purposes. The average age of your customer base is 30 to 40 years old. Your store stock includes many brands of kitchen appliances and air conditioners, as well as all the latest videogames and videogame consoles but a limited assortment of mobile phones and laptop computers. Your store s largest staff works evenings and weekends. Often you don t meet your monthly sales objectives and you, the Retail Manager, realize that you need to make some changes. What kind of changes would you make? Why? SS-8 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

17 Exercise: Local Demographics Identify the local demographics of the area in which your store is located. Provide examples of ways that you, your store, associates, and policies have adopted to support their community. Identify new ways you could adapt to the local demographics and community. 1.4 CUSTOMER CLASSIFICATION Objectives: Understand how to reward loyal customers. Recognize the value of retaining customer loyalty. Customer classification is a method of understanding and maintaining customer loyalty. Repeat customers accrue points for their purchases, which, in turn, lead to future discounts at the specific retail store. Such programs are similar to airlines frequent flyer programs that maintain customer information and ticket purchase data and give rewards or discounts to the most profitable customers and to those who have flown the required number of miles in a given time period. Exercise: Customer Loyalty Identify a well-known retailer where you have recently shopped. What is the retailer s customer classification? 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-9

18 Describe the retailer s customer classification program. If they do not have a program in place, suggest how one could be developed. How do they create and reward customer loyalty and encourage repeat purchases? What processes or feedback mechanisms do they employ that help the retailer provide better service to its customers? 1.5 KEY ACCOUNT MANAGEMENT Objectives: Identify the key customers who drive sales and profits. Understand how to maintain brand and store loyalty. Retaining your most profitable customers is key to your retail success. Customer retention and satisfaction drive profits. It is far less expensive to cultivate your existing customer base than it is to seek new, single-transaction customers. Retaining your customers can generate additional sales and profit. Consider these statistics: Acquiring new customers can cost five times more than satisfying and retaining your current customers. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%. The average company loses 10% of its customers each year. Customer profitability rate tends to increase over the life of a retained customer. As you can see by this information, a customer that you can retain for life: is more cost effective, requires less service, provides more business, and contributes to new customer acquisition through positive referrals. SS-10 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

19 Think about your favorite store. What are the qualities or activities that keep you loyal to this store? Commitment from your employees is needed first to secure long-term growth and lock in customer loyalty. How your employees treat your customers will indicate whether or not your customers continue to shop in your store. Are all customers profitable? What is the Pareto or 80/20 rule? % of your customers contribute % of your sales and profit. A key customer can be measured by: Lifetime value Extent of influence Frequency of contact Numbers of product categories purchased The 5 Steps to Key Customer Management: Step 1: Who They Are Before we can build a relationship with our customers, we have to know who they are. In an survey of 1,300 retailers (food and non-food), only 41% said that they could identify their best customers. Knowing who these customers are as well as how, when, and what they buy can dramatically improve sales, profit, and their perception of your store NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-11

20 Most companies use Customer Relationship Management (CRM) systems to identify and manage the customer experience. Depending upon the size of your retailer, they can be as basic as a client book or as sophisticated as a multimillion-dollar software system. All of these have the same objective, but the more sophisticated CRM systems provide faster access to data that allows you to improve your business. What are the objectives of Customer Relationship Management? How can the data be utilized to improve the experience of the customer and better the operations of the store? CUSTOMER Customer Loyalty LOYALTY Levels LEVELS Most Loyal and Profitable Customers Best Hope for New Platinum Members Customers with Modest Lifetime Value Represent 1% of Total Sales PLATINUM Move Up GOLD IRON LEAD Customer Focus is on Service Customer is More Price Sensitive than Platinum Limit Amount of Special Attention Due to Low LTV Customer Can Cost the Company Money The above diagram highlights the 4 levels of customer loyalty. By analyzing your customer base in this way, retailers can identify their best customers and use their loyalty programs to change the customers behaviors. Most of your best customers (Platinum) are already giving your store the majority of their business. You simply need to reward them to keep them. The loyalty programs do this. You will also want to market to the Gold level since they have the potential to move to Platinum status if you encourage them. SS-12 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

21 Example: Concierge retail service client profile. The information gives the sales associate critical information to help sell the store s products. All of the customer s transactions are listed to help guide future promotions. This might be available online as well NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-13

22 Step 2: Effectively Based on the level of sophistication of the CRM and database management, your customers may receive personalized communications. You can send information and messages to begin a differentiated and relevant relationship. This can be via , website personalization, direct mail, RSS, social media, or other methods with customer-specific content. Messages should reflect what you know about the customer. What are some examples of how companies communicate with their best, most loyal clients through direct mail or ? Exercise: Say What? (For Outbound Communications) Discuss and create customer communications steps for each of the following topics. These steps should encourage a second visit to the store for follow-up purchases. You are encouraged to share best practices used in your stores. New Merchandise or Recently Reduced Merchandise After Sale SS-14 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

23 Special Events Social media offer new ways to bring the face of your company to the public. However, great caution should be used in their development and management. Why? What are some good examples of companies using social media in this way? What are some not so good examples? Step 3: Them Retailers use different approaches to recognizing and rewarding their best customers, often with loyalty programs. Loyalty programs help 40% of food and 50% of large soft/hardline retailers to: Identify the most loyal customers. Learn more about their best customers buying habits. Offer the products and services their best customers demand. Why do you think customers value loyalty programs? What are some examples of loyalty programs? 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-15

24 Step 4: and with Them Best customers are usually not just your best customers they tend to be other companies best customers as well. These customers typically are rewarded richly by everyone they do business with. These best customers tend to be more responsive to recognition at stores that recognize their special status as a best customer. When the best customers come into your store, recognize and acknowledge them immediately. If they are using an affinity or loyalty card, thank them for their loyalty. Step 5: and to Their Ideas Loyal customers become major advocates of your brand. Engaging your customers help to design products, choose ad campaigns, post comments, select winning entries in contests, answer questions for other customers, review products, and generally contribute to your community of customers is a win-win proposition. The wisdom of the crowd tends to filter out extreme views, yet provide appropriate insight into the subject at hand. Customers also use social media, Google reviews, blogs, and website comments to advance your store or report poor service. In today s world, quality customer service is essential to promoting your store and retaining your loyal customers. Exercise: Managing Your Customers Discuss and write down how your stores accomplish the 5 Steps of Key Customer Management. Discuss and write down ways you think your stores could improve upon how they accomplish the five steps. Step 1: Step 2: SS-16 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

25 Step 3: Step 4: Step 5: 1.6 DATABASE MANAGEMENT AND ANAlYSIS Objectives: Demonstrate why retailers should collect, store and analyze customer information. Define the role of database information in attracting and satisfying customers. List ways in which customer data can be collected and used in planning. In order to effectively satisfy customers, retailers must have a good understand of their needs and buying habits. Marketing research is sometimes used to explore what customers say they are looking for. Another approach is to keep track of what they buy. Technology allows retailers to record and analyze consumer purchases, as well as capture every piece of information possible about individual customers. What are some examples of customer data management you ve seen used in a store? 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-17

26 A well-developed database enables store management to look for trends within certain customer groups or among individual customers. Databases also help retailers keep track of customer preferences. Data mining is one approach used to identify purchase patterns and make the retailer aware of such patterns among customers. What are some examples of how you ve seen stores use data mining to identify purchase patterns? Another data analysis technique is market basket analysis, in which a retailer examines the totality of items purchased in one shopping trip. This enables the retailer to see the relationship between products purchased, and it can then promote these products near each other in the store. How have you seen market basket analysis used? Exercise: Growing Your Business through Database Management and Data Mining Using the information you have learned throughout the module, discuss ways in which each of the following types of retailers can apply database analysis to increase sales. Jewelry store: Men s clothing store: SS-18 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

27 Sporting goods store: Automotive supply store: 1.7 COMPETITIVE LANDSCAPE Objectives: Describe the difference between a direct and an indirect competitor. Consider ways that your store differs from a direct competitor. Review how to conduct a competitive shopping experience. Direct competitors Indirect competitors What general differences do you see between you and your competitors? Some areas that may differ between you and your competitors: Product assortment Brand assortment Customer service approach Store environment Store policies, such as return policies or gift cards General organization of the store Signage Advertising Staff scheduling Pricing Overall customer experience Areas of excellence and mediocrity 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-19

28 Exercise: Your Competition Identify your store s three main direct competitors Identify how your competitors differ, their strengths, what their value propositions are, and what your experience has been when visiting or shopping at these competitors. Competitor Differences Strengths Value Proposition Customer Experience Your store s strengths, areas that need to be improved, and value proposition: SS-20 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

29 1.8 Ensuring Customer Satisfaction through SELLING AND SERVICE BEHAVIORS Objectives: Understand how customer loyalty affects the success of a store. Identify elements and customer expectations of self-service and relationship service models. Model appropriate selling and service behaviors. Practice how to coach associates when selling behaviors are not focused on appropriate activities. CUSTOMER LOYALTY Revisited What is customer loyalty? Why is it important? Chain of retail success Managers can build customer satisfaction and customer loyalty to positively affect sales and profitability through the chain of retail success. Elements of internal quality and the external customer relationships link together to form a chain. This relationship is fragile: If one element is missing, the entire chain breaks down and the relationship falls apart. Chain of Retail Success Internal Quality Value Customer Satisfaction Customer Loyalty Sales & Profit Fundamental Elements of Retail Businesses People 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-21

30 Products Presentation Two main models for selling and service Self Service Customers expect limited interaction with associates. Retailers with cashiers and self-service checkout lines and online shopping are examples of self-service models. Relationship Selling and Service Customers expect to interact with associates and receive recommendations, information, and answers to their questions. They expect the associate to help them make a buying decision. Examples of this include furniture and specialty stores. In many department and upper-end stores, the associate also offers assistance and solutions in the form of personal shopping. The store s approach is to build a client relationship with customers so that the customers are not only loyal shoppers in the store, they return to shop with a specific associate. This selling model is often called personalized service or clientele development. SELLING BEHAVIORS SS-22 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

31 Exercise: Breaking Down the Selling Process The 7 steps of the selling process are: 1. Greeting the Customer 2. Defining the Customer s Needs 3. Explaining the Features and Benefits 4. Building the Sale 5. Addressing Customer Concerns 6. Closing the Sale 7. Completing the Sales Transaction Actions to occur Actions to avoid Role of manager and associate Importance of this step Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-23

32 CUSTOMER SERVICE BEHAVIORS What Customers Look for When They Shop 1 Customers are different. They look for different things in different stores. There isn t a simple formula or solution to meeting their needs. There are, however, a few general things that customers look for when they shop. Convenience Selection Product knowledge Total service Price Exercise: Practicing Selling and Service Behaviors Create and practice a role-play with your assigned scenario in which you provide supportive, effective service and selling behaviors. One person will play the role of the customer, one the sales associate. Both should make sure they play the role of the sales associate. Scenario 1 A bride is shopping for her wedding clothes at a specialty retailer. The shop is very busy, and she has been waiting for a long time to see clothes or get help from an Associate. This is the only store she wants to visit, as it s the best one in her neighborhood. Finally, after waiting 30 minutes for help, she approaches a sales associate. Scenario 2 Your store has a special sale and has advertised a particular popular item at a very good price. Unfortunately you have run out of the item and will not receive another shipment for two weeks. You have other similar items but they are not as popular and cost more. A customer enters your store asking for one of these items. Scenario 3 A customer has a friend who gave him a very special gift that he cherishes. The customer s friend didn t realize that it was broken when the customer received it. He is a very frequent shopper at the store where this gift was purchased and decides to see whether he can exchange it for a new item that works. The store typically does not take back things that were purchased; there is no return policy. He enters the store and you approach him to help. Scenario 4 The Chinese Mooncake Festival is approaching. Your store typically stocks many mooncakes for customers to purchase, but this year, they won t be available. Every year, the same customers return to buy their mooncakes, and you re expecting a lot of people to come to your 1 Dion, James (2008). The Complete Idiot s Guide to Starting and Running a Retail Store. Penguin Group Inc. SS-24 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

33 store. Your store sells many types of food for various festivities that are available throughout the year, but customers come into the store looking to purchase mooncakes. When they see that you don t have any, they start to complain. 1.9 ESTABLISHING SELLING AND SERVICE GOALS Objectives: Describe how sales and service goals are determined. Identify the elements involved in developing the financial plan for a department. Describe how to use performance metrics to improve/drive sales and service. Identify methods for measuring sales and service. The ability of the Retail Manager to achieve goals depends on effectively directing skilled sales teams in two key results areas: sales productivity and sales growth. Sales productivity Achieving higher sales production per associate and a lower cost to sales ratio. Sales growth Achieving higher overall sales volume. A Retail Operations Manager achieves results by: Building the sales team, Increasing sales productivity, and Leading sales growth. List ways in which a Retail Operations Manager can increase sales productivity and growth: 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-25

34 What Information is included in the following retail financial plans? Sales Plan Merchandise Plan Store and Department Plans Types of sales and service Goals Sales Goal Managers set daily, weekly, and monthly sales goals to give Associates direction. Goals should be realistic and should reflect the planned sales for your department. Sales Goal = Projected Sales Per Hour X Number of Hours Scheduled to Work For example: Projected Sales Per Hour $50 X 20 Hours Scheduled =$1,000 Sales Goal Actual Sales The total gross sales generated during a specific reporting period for a department or store. Return Percent This is the percentage of items sold that were returned by customers for a specific period of time for each department and store. Lowering the return percent increases sales and profit. A high return percent indicates that customers may not be receiving proper assistance with their purchases or that the products are unsatisfactory. SS-26 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

35 Hours Worked The hours worked during a specific reporting period (daily, weekly, or monthly). Number of Transactions The total number of customer transactions completed by a store or department during a specific reporting period. Number of Items Per Transaction This ratio indicates the average number of items each customer buys during each transaction and the associate s ability to sell multiple items. Increasing the number of items per transaction has a positive impact on sales volume. Items Per Transaction = Total Number of Items Sold/Total Number of Transactions Average Sale The average sale metric is an indication of how much each customer buys. It is sometimes referred to as average dollars per transaction. Average Sale = Total Sales Value/Total Number of Transactions Sales Per Hour Sales per hour is a measure of sales productivity and provides a measure for comparing sales volume for the store and the staff. Sales Per Hour = Total Sales Value/Total Hours Worked When it comes to improving sales and service results, you must manage based on fact, not opinion. Associates want to know how they are doing, and you need a fair and objective method for assessing their performance. As a Retail Manager you must track and evaluate individual and department numbers. Sharing department results is an effective and worthwhile management process. Establishing clearly defined sales goals, tracking actual performance, and holding the sales staff accountable for achieving those goals helps to increase sales results. By focusing on the gap between sales and service goals and actual results, Retail Managers are able to lead the people, the products, and the presentation to improve selling and service. People: Sales Associates Products: Merchandise 2011 NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-27

36 Presentation: Visual Impact Developing personal goals for yourself and with Sales Associates A goal is simply a with a. A simple formula we all can use to write good quality goals called SMART. SMART goals are: Specific Measureable Achievable Results-oriented Time-based Grammatically, the goals would follow this structure: Verb + Object + Measure + Time Exercise: Writing Smarter Goals 1. Read the poorly written goals and rewrite them as SMART goals using the SMART formula: Verb + Object + Measure + Time (Example: Increase + Units Per Transaction + By 3 Units + By October 31) I want to increase my sales. I want to sell more units. I want to do a better job of following up with my customers after the sale. I want to gain more product knowledge. Remember that goals should be motivational and achievable yet challenging. 2. On your own, use the SMART goal formula to write one personal goal that you will work toward reaching over the next 3 months. Setting goals does not automatically guarantee that you will reach your goal each and every time. Goals are meant to be challenging. This means that sometimes we may fall short of the goal. SS-28 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

37 Common Reasons People Fail to Achieve Their Goals Their goals are not motivating enough. Their goals are determined by other people. They give up at the first sign of difficulty. They forget about their goals. They try to accomplish everything on their own NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-29

38 Personal reflection The following information is for you to use after class. Personal Effectiveness Questions Monthly Planning Session This should be done on your own. This process should take one or two hours of your time. You may want to share some of what you write down with your manager. Ask yourself these questions, and answer them in writing: Last month, did I do what I said I was going to do? If not, why not? What should I do differently this month? Now that you ve looked back on last month s performance, look ahead to the coming month. Ask yourself these questions, and answer them in writing: What are the most important things I want to accomplish this month? What specific progress do I want to make in selling key products or services? What specific progress do I want to make in acquiring new customers? How am I going to improve myself this month? How am I going to improve my team members this month? Weekly Planning Dedicate an hour or two once per week to the task of getting thoroughly prepared for the coming week. Ask yourself these questions (note that the questions are becoming even more specific): What do I want to accomplish by the end of the week? What do I need in order to do so? Daily Planning Each day, at the end of the day, ask yourself: What do I need to do to follow through on the commitments I ve made and the lessons I ve learned today? What do I need to do to be thoroughly prepared for tomorrow? What went well? What could I do better next time? These questions prompt reflection on your performance and continually keep you focused on improving your behavior and your competencies. This course of thought will eventually lead you to become a master of your profession. SS-30 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

39 Performance Coaching Performance coaching is a good way to set and determine whether associates are meeting their goals. COACH Model Communicate the objective for the discussion. Create a safe environment for the employee. Set the agenda for the discussion. Obtain the employee s perspective. Ask employee to share his/her perspective on the situation. Resist the temptation to interrupt or correct the employee. Keep an open mind to hearing his/her truth. Add your perspective and that of others. Share your perspective based on observation and specific information. Share additional data from others if possible. Gain agreement or acceptance from the employee regarding your perspective. Create an action plan Create a plan to address your objective. Hold follow-up meetings and agree to schedule for follow-up. Exercise: Preparing for Your Coaching Conversation 1. Think about a person and situation that requires coaching (past or present). You will be using this sheet for a practice coaching session so youy should think about confidentiality. 2. Using the coaching prep sheet, prepare for a coaching conversation related to the situation you chose. (Be sure to maintain confidentiality of person(s) involved). Do the following: a. Note the person/situation (this will be shared with a partner for practice). b. Think about what the goal is for the coaching session and record it. Keep in mind that this is your goal for now it may change with the employee s input. c. Write down what you think the employee s point of view might be regarding the situation. d. Record your own perspective as well as the perspectives of others you have spoken with regarding the situation. How do you share insights from others and maintain the confidentiality of the discussion? e. Consider what some action steps might be to make the needed change. Remember that these are just your ideas for now. You will want to get the employee s ideas first and supplement them with the ones written here. f. Follow-up can be left blank for now unless there is an obvious plan NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-31

40 Coaching Prep Sheet: Employee and situation: Objective of the coaching conversation: Employee s POV: Input from self and others: Action plan: Follow-up dates: Exercise: Coaching Practice with Role-Play Using the coaching prep sheet, the coach explains to the role-play partner what the situation is that will be discussed and practiced. Role-play your coaching discussion. If time permits, reverse roles and practice another round of coaching. Exercise: Handling Various Coaching Scenarios: Coaching applies to a variety of situations and the uniqueness of each individual makes the action plan and outcome variable as well. Following are some possible coaching scenarios that may come up and how you can prepare for and coach the individual. Discuss your assigned scenario and address: What is the situation? (The facts) What invisible factors should you consider? (Emotion and what was not being said) How will you uncover those factors? What questions will you ask? What solutions would you recommend? SS-32 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

41 Scenario 1 In this situation, the employee has a widely different point of view about how he is perceived by others. This employee believes that all of his work is exceptional, that he provides accurate and timely status reports, and delivers results within the time frames requested. However, in discussions you have had with your employee s clients and partners, you find contradictory information. Scenario 2 In this situation, the employee is performing above expectations, and has the potential to step into even greater responsibility. You want to give her the preparation she needs to be successful in a future role without promising a promotion. You would like this employee to take on additional responsibility and develop in areas she may not have considered. Scenario 3 In this situation, the employee does not take feedback well. In fact, he or she takes feedback personally and often deflects blame onto others. You have tried several times to provide constructive feedback, but each time you have tried, your employee has burst into a fit of rage and refuses to hear what you have to say. Scenario 4 In this situation, you have a new employee on your team, as a result of a reorganization of the department. Until becoming a part of your team, this employee always received glowing feedback and praise. However, since he joined the team, you struggle to understand why this employee had earned such accolades. Scenario 5 In this situation, you have an employee on your team who has had 5 managers in the past 4 years. Under each manager, the employee has had performance issues and has been on a Performance Improvement Plan with each. While the employee has met the demands to satisfy the requirements of the PIP, her performance is struggling again under your leadership. Scenario 6 In this situation, your employee is a stellar performer, exceeding expectations, taking on special projects, and in general doing a knock-out job. However, how she gets results is sometimes questionable. In some situations, you feel there might be borderline ethical missteps, and there are clearly issues with living the company values. Coworkers complain that she disregards the opinions of others, takes credit for the work of others, withholds information, and misrepresents financial data in budget and planning discussions. Scenario 7 In this situation, your employee is on track to Meet Expectations at the end of the year. However, you know he will be uncomfortable with that rating; he is expecting a raise and is highly motivated by money. You also know he feels a strong commitment to perform at his very best NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-33

42 1.10 TEAM MEETINGS/COMMUNICATING GOALS Objective: Identify the elements for conducting a successful store or department meeting. For a Retail Manager, ensuring that associates know about sales and profit goals and results as well as new products and events in a timely manner is challenging. Associates are working various shifts, returning from days off, and are required to know what s new and going on in the store every day. Often a retailer s biggest challenge in day-to-day communication is finding the most effective way to get information to associates. Exercise: Communicating Information to Associates On separate sticky notes, write how you communicate information to your associates. (Example: Gather team together for a quick huddle prior to opening the store and just after the store closes each day.) What are some of the biggest challenges you have encountered in communicating a great amount of information to your associates? How might you resolve those challenges? Sometimes the amount of information can overwhelm your associates. How can you prioritize the amount of information being shared? SS-34 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.

43 Is there any information you should NOT share with associates? If so, what are some examples? Efficiently Using Store Meetings As a Retail Manager, you are responsible for planning and conducting department meetings and, in some cases, all-store meetings. These meetings are powerful tools for reinforcing expectations and improving everyday sales performance. The first step in planning a successful meeting is deciding whether or not a meeting is necessary. Sometimes alternate methods to inform associates are just as effective, such as using bulletin board postings or having a quick chat with associates a few minutes before their shift begins. With a little careful planning and thoughtful execution, your meetings can result in increased team productivity, enhanced customer service, and improved sales SCHEDULING Objectives: Understand the staffing factors that must be considered in order to meet sales goals. Identify the factors that influence the staffing plan. Discuss the importance of planning ahead when developing staffing schedules. Learn how to analyze Staffing Utilization Reports and respond accordingly. Associates represent your store and directly affect customer satisfaction and loyalty. What is one of the most important jobs of a Retail Manager? The key to success in that very important job is to develop a successful staffing plan NRF Foundation and Castle Worldwide. All rights reserved. SELLING AND SERVICE SS-35

44 Using Sales and Transaction Data to create effective staffing plans In order to achieve sales and profits goals, a staffing plan needs to take into account: Sales plans: How much does the store and department plan to sell in a given time period? Sales history: How much was sold in the same time period last year? How do other stores and departments compare? Sales per hour productivity: What can a department generate in sales each hour? For department store retailers, this is generally about $150 per hour. Upper-end retailers may average as much as $250 per hour. The sales per hour productivity may also differ among the various departments in the store. Customer traffic patterns: When do most customers shop in the store? What are sales and number of transactions at peak times? Staffing Considerations Sales Plans The payroll budget is planned and determined as a percentage of planned sales. If sales plans are not met, budgets must be adjusted accordingly. For example, let s say that the selling cost for your store is expected to be 12% of sales. If sales are slow and adjustments are not made, the payroll budget could become 20% of sales. The store s profit margin decreases when the selling cost is that high. However, if sales are above plan, the payroll budget could become 6% of sales. In this case, you may not have enough staff on the floor to adequately serve customers, and you may be losing out on sales. A Retail Manager must monitor sales performance and respond by managing the payroll budget. You ll be responsible for the staffing plan for your department and should make adjustments to minimize the cost and maximize profit without negatively affecting the customer experience. Events It s important to be aware of upcoming promotional and store events so you can staff accordingly. Events such as big sale days, taking permanent markdowns, and inventory counts may require you to schedule additional staff, while maintaining adequate sales floor coverage. Holidays and major sales are also critical times when extra associates need to be on the floor. These are big days that require preparation and sales floor coverage planning and analysis. Staff Availability and Skills You need to know how to best use your staff to maximize sales and provide excellent service while staying within budgeted hours. Every department will have a variety of associates on the payroll. Some associates will be full-time, possibly commissioned associates, while others will be part-time or seasonal. Some associates will have many years of experience and will be very skilled at working with customers, and others will be new to retail. As a Retail Operations Manager, you need to observe your staff and learn their skills, then plan schedules accordingly. SS-36 Retail Management and Operations Curriculum 2011 NRF Foundation and Castle Worldwide. All rights reserved.